Hyundai Marine & Fire Insurance Co. (HMF) has sustained a robust balance sheet, bolstered by solid financial stability, adequate operating performance, a favorable business profile, and effective enterprise risk management, according to AM Best.
The South Korean insurer’s risk-adjusted capitalization remains strong, as indicated by its Best’s Capital Adequacy Ratio (BCAR). At the close of 2023, the company’s capital and surplus experienced notable growth, driven by market-based liability valuations and higher interest rates. Despite these changes, HMF’s balance sheet fundamentals have remained stable.
The company has demonstrated significant financial flexibility through successful hybrid bond and subordinated debt issuances, while also maintaining healthy debt leverage and coverage ratios. Its investment strategy emphasizes asset-liability management, with a substantial portion of its portfolio allocated to high-quality fixed-income assets.
HMF’s operating performance is assessed as adequate, reflected in a 7.8% return-on-equity ratio and a 96.0% combined ratio (net/net, IFRS 17 basis) for 2023. Underwriting profits benefited from the release of the contractual service margin from long-term insurance products. However, these gains were partially offset by increased medical claims and substantial onerous contract provisions.
AM Best projects improvements in long-term insurance results, driven by premium rate increases and efforts to enhance the medical indemnity loss ratio. Auto and general lines are expected to remain stable. Investment profits predominantly stem from interest income, with the additional volatility under IFRS 9 considered manageable.
As one of South Korea’s premier non-life insurers, HMF commands a stable market share of approximately 18% in insurance service revenue for 2023. The company benefits from its strong connections with Hyundai conglomerates, including Hyundai Motor Group, which ensures a steady stream of business.
HMF maintains a diversified portfolio, focusing on general agency channels for long-term insurance and online channels for auto insurance, aiming to drive growth and profitability.
